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KEY POINTS
- The need to bring the CTA qualification up to date
- The virtues of a modular exam system
- Ensuring that the candidate's breadth and depth knowledge of tax is examined
- Credits will be given for papers passed
The Chartered Institute of Taxation's CTA qualification is one of the most respected in the UK. The exams which have to be taken are known to be demanding and rigorous and should never be undertaken lightly.
So why change it?
Back in July 2005 the institute's council agreed that an in-depth review of the CTA exam structure should be carried out and that the exam syllabus would be reviewed.
It was vital that any new structure should maintain the high standard of the CTA qualification, so the working party, chaired by John Beattie, a past president of the CIOT, faced a challenge.
One thing was certain, says John, 'we wanted to keep the gold standard — if you want to be a tax professional, we want you to have the CTA qualification.
But it has to be up to date and fit in with today's tax professionals' lives'. So the working party consulted with all groups who had an interest in the exam, i.e. employers, training bodies, students past and present, and found that certain consistent threads ran through what these groups said fitted in with the working party's thoughts.
Background
During his year as president, one of John's themes was tax training. He was concerned that students outside the major cities did not have the same opportunities as those who lived in or near them. This led him to think about the structure of the CTA.
One concern was the pass rate. John says that 'compared with other professional exams, the CTA always seems to lie behind'. While this was not a reason in itself to change the structure, he and others felt that it was something that needed to be remedied.
Then there was the phenomenal volume of material which candidates have to study in order to sit the exam. John felt that it was 'almost too much to ask from them.
What with ever increasing changes, legislation which was becoming more and more complex, the syllabus was getting bigger and bigger, with nothing falling off at the other end'.
Candidates had to learn about aspects of tax legislation which they would probably only come across once or twice in their career. Thus, it was important to review syllabus.
In order to this, the working party had to go through the legislation, a job which, says John, was 'very long and laborious'. But as a result, decisions were made about which parts of the legislation should not be examined.
It is also important to remember that, increasingly, tax professionals specialise these days. So what was the point in having an exam that makes all students learn all the syllabus in depth?
The working party therefore concluded that a modular structure was the answer: candidates can decide when to sit the papers and what subjects they wanted to be examined on in depth.
Then there is the actual studying itself. When as president, he visited the various branches, John realised how difficult it could be for some people to study for exams.
He cites long hours of work and family commitments as being among the factors which caused difficulties and says it was 'quite often too challenging to make them sit and pass all the exams in one go'.
Modular system
A modular system will allow 'people to manage their study time better', says John. 'If you have a certain number of hours' study time, and you can channel it into, say, two subjects, you will do much better than if you have to split your time because you need to sit all four papers in one attempt'.
This is more efficient use of time and as a result the candidate's level of knowledge will be better. It is different for students in the large practices, where they get plenty of study assistance. For someone working in a local firm it is different. We need to cater for today's market.
Also students are not used to sitting four exams in two days. This is not in accordance with today's style of examinations; everything is more modular.
Depth and breadth
Whatever the new structure was, it had to examine breadth and depth. Even though many professionals do specialise, they have to know at least some degree of what other taxes entail so they can recognise a problem, even if they cannot solve it.
So the working party came up with the concept of advisory papers. These will be specialist papers and examine the candidate's depth of knowledge.
The candidate chooses two specialist papers out of six. The aim, says John, was 'to let candidates choose papers which were more in tune with their professional work'.
The papers have been organised in a way that the working party believes will suit most candidates, i.e. three in the morning and three in the afternoon (see Box 1).
So if a candidate chooses to do the VAT on UK domestic transactions paper, which is done in the morning, he can also do the other VAT paper, i.e. VAT on cross-border transactions and other indirect taxes, which takes place in the afternoon.
The choice of which papers they take is entirely up to the candidates, but depending on their choice, they may not be able to do them in one sitting.
Candidates will be allowed to sit one paper in one sitting if they choose, or do all the papers in one hit. But if two advisory papers are in the same group, the candidate will have to do them across two sittings.
Then there are the awareness papers which take place on the second morning. These comprise 12 short questions, each worth five marks, with five minutes per questions and must be on different subjects from the candidate's advisory papers. The modules available are:
- taxation of individuals;
- taxation of unincorporated businesses;
- corporation tax;
- inheritance tax, trusts and estates; and
- VAT including stamp taxes.
Candidates cannot sit the same awareness modules as the advisory papers they have sat.
The case study
The fourth exam is the application and interaction paper which brings everything together. The idea, says John 'is to replicate something you might come up against in the office'.
A crucial difference between this and the old structure is the timing. Taking into account that people work at a different pace, the working party felt that is wrong to make the paper time pressured.
So candidates will have up to two and three hours to complete, with the quality of the answer being paramount.
The examiners will be looking for something that could be given to the client, so presentation will be important, rather than just an outpouring of everything that the candidate knows on the subject.
E-assessments
In addition, candidates will have to pass two one-hour e-assessment papers:
- professional responsibilities and ethics; and
- law.
John feels that these subjects fit in well with an e-assessment structure. John says that the subject matter of the e-papers is important if people wish to become members of the CIOT.
Risk management has become very important and advisers must know what they should be doing for a client, what risks they need to evaluate, what their professional responsibilities are, ethical guidelines, etc. Law has always been integral to tax.
The e-assessment papers must be sat and passed before candidates sit the last tax paper. The papers will be a mixture of multiple choice and multiple reasoning at a level to show a good knowledge.
All the candidate will have to do, once registered with the CIOT, is to apply online to sit the paper. He will know the result immediately after sitting the paper, and if he fails, he does not have to wait six months to re-sit it; he can do it whenever he wishes.
Attractive structure
John is 'very confident that the new structure is attractive'. He hopes that the pass rate will increase, because students will be more prepared going into the exam.
They will not have had to spend hours and hours studying subjects in depth which they may never look at again after the exam. They will be able to organise their studying more effectively, they will be able to choose their subjects and, within certain time limits, choose when they want to sit the exam.
The credit system introduced in 2006 will continue. It was introduced, says John 'because it was considered unfair that if a candidate did not pass all four papers he had to sit all four again'. So far, John says that the credit system has been successful.
However, once a candidate has passed a paper, that credit will not be open-ended. He will have to pass all the exams within three years. This seems a realistic time limit, says John, as it will 'not dilute the qualification and what the candidates passed on day one would, as much as it could be, still be relevant in three years' time'.
This should also give people the opportunity to plan their studying the way they want to.
Exemptions
Members of some other professional bodies were entitled to an exemption in certain papers under the old structure. These worked well, says John, but exemptions do not fit in quite so easily in the old structure.
However, it was necessary to take account of the candidate's primary qualification, e.g. ACA, so it was decided to give credits, rather than exemptions.
The problem was where to give the credit. If the aim of the CTA is to provide 'breadth and depth', the credit could not be given in the advisory or awareness papers.
In the end, it was agreed to give members of accountancy bodies a credit in the case study paper. All accountancy exams have a case study in them, so candidates have proved that they can apply knowledge in a certain way.
John says that ultimately, 'this seemed the logical place to give the credit'.
Some credits will be available for the advisory papers. For example, IIT members and fully trained inspectors of taxes will be exempt from two advisory papers. They will all still have to do the awareness and case study papers.
John points out that these credits are not open-ended, however. They last for a further five sittings from the date when the credit is awarded.
There are transitional arrangements which will transfer any credit in respect of papers they have passed under the current structure.
Launch
The new exam structure starts in May 2009, so by launching it this spring, gives potential candidates 12 months' study time.
The frustrating thing for John and his working party is that they now have to wait until July 2009 when the first results come out, to gauge how successful the new structure will be.
It will be particularly interesting to see how many people will take advantage of the modular system, as well as seeing which papers are most popular.
Overall John is very positive about the new structure and believes that it does not dilute the qualification one iota. It meets the needs of today's tax professionals.
He would love the pass rate to exceed 50%, but notes that it is not possible to determine the quality of candidates — there is no verbal exam, and candidates do not have to prove to what extent they have studied before they sit the exam.
John wanted 'an attainable professional qualification that could be passed if you studied properly'. He says 'a lot of effort has been spent on reaching this new structure. It is innovative and I have every belief that it will work'.
Full details of the new examination structure can be found at on the CIOT site's dedicated page.
